Beef challenges and opportunities abound in region

2011-08-31T09:06:00Z Beef challenges and opportunities abound in regionBy Ryan Cox, Ph.D., Extension Meats Specialist, University of Minnesota Beef Team Minnesota Farm Guide

The issue of food, and more specifically beef prices, and the fact that they are continuing to rise is a fairly complex issue with a number of key components having an effect.

Consumers already experiencing a challenging economy must also understand the components behind beef prices and the higher price they experience at retail and foodservice starts with the simple concept of supply and demand.

The cattle herd in the United States has shrunk to its smallest size on

record. In July, it is estimated that the number of cattle was down

approximately 1.4 percent from a year earlier, reaching numbers similar to those in the early 1970s. Simply put, less cattle means less beef and

consequently a higher demand and price.

Considering recent weather phenomena such as frost, flooding and droughts, commodity prices have risen in the past year, with corn futures reaching nearly $8 per bushel in June. Although corn prices have dropped slightly, they still remain increased by approximately 7 percent for the year.

Summer weather, including severe heat in the Midwest, will continue to

challenge harvests and may contribute to further increases in commodity costs.

As a result, all "downstream" production will incur higher production costs, particularly beef. This production system already experiences among the highest production costs, as it considers the cost of feed, fuel and yield, not to mention compounded inflation issues.

In the age of $4 gasoline and increasingly prohibitive food prices, consumer purchasing trends continue to evolve. In addition to this, livestock feeding costs continue to remain high as corn prices urge producers to seek alternative feeding options.

As a result, retail beef prices have continued to increase at a steady pace.

The United States Department of Agriculture projects grocery store prices to increase 3-4 percent in 2012. Of particular interest is the fact that although they are increasing as well, poultry prices have not increased at the same rate as red meat.

In the June issue of Meatingplace magazine, editors addressed this trend with a number of articles noting the industry response. In this publication, it was noted that while the USDA predicts that red meat prices will rise 6-7 percent in 2011, poultry is only expected to increase 2.5-3.5 percent. More specifically, in early 2011 as prices for items such as steaks and ground beef rose, chicken leg prices actually dropped slightly.

Consequently, there is the expectation that during the summer months when consumers have been spending more of their budgets on traveling and higher gas prices, there may be a marked increase in the purchase of poultry products, as they may be perceived as a value opportunity.

Those in the meats industry are fully aware of the value and quality that can be found in red meats such as beef. As has been discussed in previous articles, these meat products also provide a tremendous health benefit to the consumer, providing a balanced proportion of amino acids for the development of protein, as well as essential nutrients such as iron and zinc.

During a more challenging economic climate, it is critical for those in the

beef industry to continue to emphasize the unique quality that is inherent to the beef eating experience. Although often purchased at a higher price per weight, the intangibles of eating beef are tremendous.

For further questions regarding beef or meat science, visit the University of Minnesota Beet Extension page at or www. for more information.

Copyright 2016 Minnesota Farm Guide. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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